The directors of the organization are in charge of running the business on a daily basis. As the company's ultimate owners, the shareholders who made the investment have complete authority to choose and fire the company's directors.
Important Provisions to remove the Director under the companies act, 2013
1. Section 169 of the companies act, 2013
2. Section 115 of the Companies Act 2013 and
3. Rule 23 of the Companies (Management and Administration) Rules, 2014
Who cannot be removed?
- Director appointed by the tribunal under section 242 of the companies Act 2013
- Director appointed under section 163 of the companies act, 2013 (Proportional Representation).
Procedure to Remove the Director
1. Shareholders shall serve the Special Notice to the Board of Directors to remove the director by conducting the General meeting by way of passing the Ordinary Resolution.
Independent Director re-appointed for second term under section 149(10) shall be removed by the company only by passing the Special Resolution.
(Shareholders either individually or collectively by such number of members holding not less than 1% of total voting power or holding shares on which an aggregate sum of not less than Rs.5,00,000 has been paid up on the date of the notice can serve the notice.)
2. Notice shall be sent by the members to the company not earlier than 3 months but at least 14 days before the date of meeting at which the resolution is to be moved.
3. On receipt of notice of a resolution to remove a director, the company shall forthwith send a copy thereof to the director, whether or not he is a member of the company, shall be entitled to be heard on the resolution at the meeting
4. After receipt of notice At least 7 days before the date of meeting, company shall give it member’s notice of resolution in the same manner as it gives notice of any general meetings.
5. If it is not possible to send the notice it can publish the notice in two newspapers.
6. The Director who is being removed can make a representation in writing to the company and requests its notification to members of the company, the company shall, if the time permits it to do so,—
(a) in any notice of the resolution given to members of the company, state the fact of the representation having been made; and
(b) send a copy of the representation to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representation by the company),
(c) if a copy of the representation is not sent due to insufficient time or for the company’s default, the director may without prejudice to his right to be heard orally require that the representation shall be read out at the meeting:
(d) Provided that copy of the representation need not be sent out and the representation need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Tribunal is satisfied that the rights conferred are being abused to secure needless publicity for defamatory matter; and the Tribunal may order the company’s costs on the application to be paid in whole or in part by the director notwithstanding that he is not a party to it.
7. A vacancy created by the removal of a director may, be filled by the appointment of another director in his place at the meeting at which he is removed, provided special notice of the intended appointment has been given.
8. A director so appointed shall hold office till the date up to which his predecessor would have held office if he had not been removed.
9. If the vacancy is not filled in the same meeting, it may be filled as a casual vacancy in accordance with the provisions of this Act:
Provided that the director who was removed from office shall not be re-appointed as a director by the Board of Directors.
Step by step to remove the Director
1. Special Notice of resolution shall be received from the shareholder 14 days before the date of General Meeting.
2. Convene the Physical Board Meeting to approve the notice of General Meeting.
3. At least 7 days before the date of meeting notice of resolution shall be served to all members, in the same way as general meeting of notice served.
4. Notice shall also be forwarded to the removing director and if he send any representation it shall be forwarded to all the members.
5. Convene the Real time EGM where the director being removed would be given an opportunity of being heard and then an Ordinary Resolution shall be passed.
6. Within 30 days from the date of meeting file the form DIR-12 with ROC.
Note: Since it is the removal of director from his office without his consent it is needed to send the all notices through courier and email and conduct the real time Board Meeting & General Meeting, to avoid future legal disputes.